Australia has a broadband vision – do we?

The UK government currently has no plans for BDUK beyond 2015

I spent Christmas and New Year visiting friends in Australia and I took the opportunity to catch up on what was happening with their National Broadband Network (NBN) Co.

In April 2009 I was representing Ofcom at the Commsday Conference in Sydney speaking on standardised Wholesale Ethernet Access when the Labor Government announced that, rather than continue increasingly frustrating negotiations with an aggressively incumbent Telstra, they were going to build the fibre network they believed Australia needed, themselves.

There was near universal agreement that this was a bold and visionary stroke, but there were also concerns over the price tag of around $AU 40 Billion, and the technology choices made – Fibre-to-the-Home (FTTH) plus fixed wireless and satellite. And both the principle and the practise – should the state be building a network and even if it should, could it do so in time and to budget?

Over Christmas and New Year I met with Stephen Conroy, Minister for Communications, Malcolm Turnbull, Shadow Minister for Communications, as well as the CEO and CCO of NBN Co and other stakeholders to see where they were in providing answers to these questions.

Well, they have just completed their target of having construction commenced or completed in areas covering 758,000 premises before the end of 2012. They are on track to achieve their end of June 2013 target of 286,000 premises passed. After a ramp up over the next eighteen months they expect to level out at approximately 6000 premises passed per day until 2021.

The network is Gigabit Passive Optical Network (GPON) FTTH to 90% of the country with the rest guaranteed 12 Mbits through fixed wireless (not mobile) and satellite. Controversially NBN Co is also paying Telstra and Optus to decommission their hybrid fibre-coaxial (HFC) networks and migrate those customers to the NBN. These HFC networks cover about 20% of the population – the richest, densest, easiest to get to 20%. NBN Co argue they need those customers to make the overall economics of what is a natural monopoly work.

NBN Co will be a purely wholesale play, no retail, and only offering a ‘simple’ layer 2 ethernet service which, not by coincidence, looks something like the standard wholesale access that I was promoting when I worked for Ofcom. This Active Line Access has been formally standardised by NICC - although BT still do not support it.

Australia has a unique network topology, 85% living within 50km of the coast and density is good for networks costs. However, 76% of Australian homes are detached houses as opposed to only 22.5% in England, making for lots of long local loops.

Each home will have a box like today’s Virgin Media or Sky boxes, to enable the delivery of a wide range of Ethernet based services from home movies to telemedicine. Importantly though, each of these set-top boxes will have four Ethernet ports, so the customer doesn’t have to be ‘captured’ by one provider for all services.

At $Au40 Billion it is costing about £2000 per home. In the UK, by contrast, we are spending approximately £2 Billion of public money to deliver FTTC to the ‘final third’ that is around eight million homes. So that’s £250 per home, one eighth what the Australians are spending.

But it is not a fair comparison – firstly there is just the sheer size of Australia – roughly 32 times the landmass of that of the UK. This size has a direct impact on the costs of rolling out Broadband infrastructure in Australia, with the costs to deliver the last 30% far greater to that of the first 70%.

Also Australia is getting fibre to the home, which currently means about 100 megabits but in practise is almost infinite as technology advances mean we can encode more and more data into the simple turning on and off of light down a fibre. In contrast, fibre to the cabinet is already getting towards the physical limit of the copper infrastructure rolled out in the twenties and thirties and any further advances require short line lengths and hugely complicated – and energy hungry – signal processing.

But Australia is also getting an asset – NBN Co will own the network and anticipates a return of 7% to the Government. The subsidies we are paying out are ending up in BT’s coffers and BT owns the resulting network.

Clearly the UK is not in a position to make the kind of investment NBN Co represents. Autralia’s banks did not require a massive bailout and their economy has not suffered a double dip recession.

But what the UK should be able to deliver is a vision of our communications future. Australia knows where it is going and why. In the UK the Department for Communications chaos could not even put together a green paper, and in response to my recent parliamentary question, said it had no plans for BDUK post 2015:

Chi Onwurah: To ask the Secretary of State for Culture, Media and Sport what plans she has for Broadband Delivery UK after 2015. [131540]

Mr Vaizey: There are currently no plans for Broadband Delivery UK beyond the current spending review commitment.

UK businesses and consumers need to know what kind of broadband future they can expect. It’s increasingly clear this Government isn’t going to provide that.

Comments

Alex LaneSo it appears the UKs real problem is structural and political not only does the UK lack a long-term plan to achieve a similar goal to Australia the UK would have to either create a new national infrastructure provider to replace Openreach or re-nationalise Openreach as happened with Network Rail As Chi notes thats a very expensive optionI think its worth pursuing anyway but its also worth noting that many complaints about BT talk about a management still rooted in inflexible pre-privatisation mindsets This could just be an easy off-the-shelf prejudice or it could be that renationalisation carries its own risks2013-01-22T12:39:55Z

ChiOnwurahMPThank you all very much for your comments and glad they are largely positive In responseYes it did strike me that the NBN debate in Australia was polarised on a political rather than technical or economic basis which cant be goodIt is a very good point that it is FTTP not FTTH so business benefits with additional benefits to the economy I should have mentioned thatYes when doing a cost benefit analysis the real cost to the country should be calculatedFinally when Labour were in power in UK I was working for Ofcom and could not speak out politically but I did actively promote wholesale ethernet acess and the benefits of technology as these links show1 httpstakeholdersofcomorg2013-01-21T13:56:08Z

Graham ShepherdIt should also be remembered that the A375B capital cost includes payments to Telstra of about 11B NPV for use of ducts and decommissioning of its copper and HFC networks Another 800M goes to Optus Telstra incurs some minor costs for this but it also gets some major financial benefits back including eliminating the maintenance costs of itsageingcopper network So the cost to the economy is closer to 25B NPV over 10 years Allowing for its lumpy nature this equates to rather less than Telstras current annual capex and about half of its capex when it had a fixed network to invest in Telstra is looking good for shareholders at the moment and NBN is looking good for the Australian economy as a whole2013-01-21T04:12:17Z

StevenThe cost per home is not quite accurate as businesses large and small will also benefit She rightly highlights the ability to connect to more than one service so for small home businesses of which there are tens of thousands in Australia it means that you could have one account for home and one for businessThe other benefit are tiered guaranteed speeds so the network is further subsidised by those wanted the faster speeds 40 have taken up the fastest speed so farI just hope that the Liberals dont get in power as they see a FTTN future which should have been built over a decade ago and offers no future thinking to Australias digital economy2013-01-21T01:46:15Z

midspaceHi ChiAfter reading your article Id like to point out that NBNCo are actually installing Fibre to the Premises FTTP not just Fibre to the Home FTTHFibre is going to both business and home alike The financial benefits to business from getting fibre direct to their doorstep are surely just as important as fibre coming to a home residence2013-01-17T22:49:28Z

Todd PlaceyI live in Australia and this is the first balanced assessment of our NBN to date Our media has contorted and made a witch hunt of this plan of ours and it is amazing that it takes another country to put it all in perspective I congratulate you all on a fairarticle and wish you all the best for the future of communications in the UK2013-01-17T21:55:11Z

cyberdoyleShame Chi didnt speak out like this when Labour were in power in the UK Now the boot is on the other foot shes talking a lot more sense Interesting that she makes the point that what the UK is doing is already obsolete Spending billions on old copper technology is such a mistake For once I agree with her2013-01-17T13:13:57Z

Martyn DewsSome pockets of the UK have vision but it means getting out and DIY-ing it Gigabit fibre is being deployed now in the rural areas near where I live wwwb4rnorguk2013-01-17T09:53:42Z

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